The USD/CAD has managed to increase further today, but remains to see what will happen after the FED will publish the Federal Funds rate, the rate is expected to remain steady at 0.50%, this situation could weaken the USD again, the currency traders could be disappointed by another delay and could go short on the greenback in the coming weeks. The pair has increased significantly in the current week, the rate has reached fresh new highs, but the gains could vanish if the FED Chair Yellen speech will be more dovish today. Maybe will be best if you’ll stay away from trading in the coming hours because the FOMC Statement and the FOMC Press Conference could bring high volatility on the major currency pairs.
The USD has increased today also because the economic data has come mixed, the Producer Price Index has increased by 0.4% in May, exceeding the 0.3% estimate, while the Core PPI has increased by 0.3% in May, much more compared to the 0.1% prediction. Moreover the Empire State Manufacturing has jumped in the positive territory, has increased from -9.0 to 6.0 points, signaling improving conditions. Unfortunately for the greenback, the Industrial Production and the Capacity Utilization Rate have disappointed today, the industrial production has decreased by 0.4% in May, much compared to the 0.2% estimate, while the Capacity Utilization has decreased from 75.3% to 74.9%.
The Loonie has decreased somehow surprisingly because the Canadian Manufacturing Sales have have increased by 1.0%, much more than the 0.7% estimate. The USD/CAD continues to increase even if the USDX has slipped lower on the short term, the index has found temporary resistance and now is seeking for strong support, the rate has reached new highs in the morning but the rate has erased the morning gains.

The price is approaching the 23.6% retracement level and could jump even above this level if the USD will remain strong in the coming hours, the pair has managed to escape from the previous descending pitchfork’s body, the perspective remains bullish as long as the price is trading inside the ascending pitchfork’s body, the upward movement will resume only if the price will jump and stabilize above the 23.6% retracement level. The USD/CAD could find strong resistance at the 1.3191 horizontal level, the short term target is at the median line of the ascending pitchfork, we’ll have to wait to see how the price will react after the FOMC Press Conference, the pair could start another leg lower if will escape from the ascending pitchfork’s body.

You can see on the h4 chart that the price has found strong support somewhere at 1.2654 level, the buyers have failed to push the rate below this swing low, so the buyers have taken the full control and have pushed the rate toward new peaks. The rate has retested the upper median line of the short descending pitchfork before has started the current rally. Technically the rate is expected to increase further, but the price will be driven by the fundamental factors tonight.

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Olimpiu Tuns

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